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The Foremost REIT has been designed to offer accredited investors the opportunity to invest with us in stable income producing commercial properties located in the greater Toronto area (GTA).
Investment diversification and an attractive yield on investment are key reasons for investors to consider the Foremost REIT. It is noteworthy that real estate is generally considered to be an excellent hedge against inflation.
Property types to be acquired by the REIT will include office buildings, retail plazas, industrial buildings, apartment buildings and mixed-use commercial complexes. Properties will only be acquired in the GTA, specifically the area stretching from Kitchener/Waterloo in the west to Bowmanville in the east and north to Barrie. This area has long been one of the most stable real estate markets in Canada and expectations are that it will remain so. Commercial real estate has its challenges at this time in the US market however it has continued to be a solid asset class in the GTA with strong, ongoing ownership by pension funds, large public reit's and other large institutional investors.
Property acquisitions and asset management will be undertaken for the REIT by Foremost Realty Management Inc., the principals of which are Ivan Stone and Tim Bankier. Both of these individuals have extensive real estate experience in the GTA. Management fees are a reasonable base fee of 0.75% p.a., calculated on the cost of the assets in the REIT plus 20% of cash returns above 6% calculated annually, if applicable. There are no other fees or markups payable to the Manager. In keeping with the goal of aligning interests between the REIT investors and the Manager, the Manager will receive a 20% incentive share of any capital gains earned on the sale of a property owned by the REIT.
The focus will be on acquiring mature, substantially leased properties in attractive locations. Stability of cash flow will be a key benchmark. Mortgages on properties owned by the REIT will be conservative - not to exceed 60% of value.
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Investors will receive regular, quarterly cash flow distributions generated by rental income at the property level. Investors will also benefit from capital appreciation as real estate values increase.
The Foremost REIT has been structured to be tax efficient for its investors with no tax paid at the REIT level. Investors will own units in the trust, which in turn will own the properties to be acquired. The units in the trust are not presently eligible for RRSP’s.
The Foremost REIT is not a public offering and the units are not listed on any stock exchange. There are certain redemption rights, as described in the Offering Memorandum. Unlike a public REIT the units are not marked to market daily but rather are valued, at least annually, by the Manager, with appraisal input. Avoiding the ups and downs of unit valuation in the public markets is one of the advantages of the Foremost REIT for investors with a longer investment horizon.
For complete details concerning the Foremost REIT please refer to the Offering Memorandum which is available by contacting:
Tim Bankier - Trustee
(416) 488-5300 ext. 205
tim@foremost-financial.com
Ivan Stone – Trustee
(416) 488-5300 ext. 222
istone@foremost-financial.com
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